What are lithium companies riding on?


Lithium is a soft silvery-white metal which is highly reactive and does not occur in nature in its elemental form. In nature, it occurs as compounds within hard rock deposits and salt brines. Lithium and its chemical compounds have a wide range of industrial applications resulting in numerous chemical and technical uses. Lithium has the highest electrochemical potential of all metals, a key property in its role in lithium-ion batteries. Rechargeable lithium-ion batteries typically weigh approximately 75% less than an equivalent lead acid battery, making them an ideal solution for high-performance products, including electric cars, bikes and wheelchairs. The supply/demand fundamentals for lithium put this highly sought-after metal in a league of its own compared with other commodities. Demand is predicted to grow at an annualized rate of more than 12%, and this could be set to accelerate further as its widespread use in conventional industries such as ceramics, glass, batteries and pharmaceuticals gets overrun by growing consumption in rechargeable batteries and electric motors for hybrid and electric cars.

Advances in Lithium battery technologyAdvances in Lithium battery technology; (Source: Kalkine Research)

Australian lithium companies are in focus after the South Australian government reached an agreement with US automotive and energy major Tesla to build the world’s largest lithium battery in the state. The share price of Australian lithium companies, Altura Mining (ASX:AJM), Pilbara Minerals (ASX:PLS), Neometals (ASX:NMT), Galaxy Resources (ASX:GXY) and Orocobre (ASX:ORE) rose between 2% – 5% on Friday. The share price of Lithium Australia (ASX:LIT) zoomed by 42.86% at the end of trading on Friday, after the company announced that it will start drilling at its Ravensthorpe lithium project, in Western Australia, by next week.

Global Lithium demand estimatesGlobal Lithium demand estimates; (Source: Kalkine Research)

Further, the rapid growth in demand for lithium is being driven by the rapid growth in the lithium-ion supply chain in China due to upcoming major chemical conversion capacity expansion over the next five years. Chinese Central Government’s policy towards ‘New Energy’ and broad transport electrification (EV’s and E Bikes) is expected to further support the demand. The lithium ion battery has been around for decades, but the worldwide shift towards smart phones, electric bicycles, cars and household solar storage is driving up demand.

Lithium demand estimates for China's electric vehicle batteriesLithium demand estimates for China’s electric vehicle batteries; (Source: Kalkine Research)


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